History of Cannabis Regulation

The support for cannabis legalization is growing every year as more countries continue to explore opportunities within the cannabis industry. In particular, the North American region is witnessing an immense swelling of support for legalization. For instance, last year Canada’s federal government decided to legalize adult-use cannabis, making it the second nation to ever do so.

Now, the U.S. and Mexico are also experiencing strong advocacy for the legalization of cannabis and although citizens from both nations are actively supporting legalization, the federal government has not implemented a program yet. However, the U.S. government has granted the power to legalize the plant to each individual state. As a result, more than half the U.S. has legalized cannabis for medical use, while just over a fifth has permitted its legal, recreational use.

To better illustrate the shift, in the early 2000s, approximately 31% of Americans supported the legalization of marijuana. By 2018, six in every ten Americans, or more precisely, 62% said that marijuana should be legalized, according to Pew Research Center’s survey. Specifically, most millennials are in favor of legalizing marijuana compared to other generations, as approximately 74% of millennials advocated for legalization, while 63% of Gen Xers and 54% of Baby Boomers supported the movement.

Furthermore, politicians have also begun to change their stance on cannabis legalization because of the positive data flowing in from clinical trials. The survey also highlighted that 69% of Democrats said marijuana should be legal while the Republican party remains split with 45% in favor and 51% opposed. Nevertheless, support among Republicans has risen from just 39% in 2015.

Meanwhile, Canada’s legalization marked a historic milestone in the cannabis industry, creating a global powerhouse. Moreover, if the U.S. and Mexico were to also legalize cannabis, it could potentially influence other nations to explore the industry as well. And, as more countries decide to legalize cannabis for medical use and potentially recreational use, the overall industry is positioned to experience exponential growth. According to data compiled by Mordor Intelligence, the global cannabis industry was valued at USD 14.5 Billion in 2018. By 2024, the market is expected to reach USD 89.1 Billion while registering a CAGR of 37% during the forecast period from 2019 to 2024. Pasha Brands Ltd. (OTC: CRFTF) (CSE: CRFT), Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON), KushCo Holdings, Inc. (OTC: KSHB), The Green Organic Dutchman Holdings Ltd. (OTC: TGODF) (TSX: TGOD), MariMed Inc. (OTC: MRMD)

Canada moved to legalize cannabis entirely back in October 2018 and during the first several months of legalization, the country experienced nationwide shortages. Cultivators and retailers were heavily limited because of federal restrictions that curtailed their business operations. For instance, Statistics Canada reported that on average, Canadian cannabis consumers paid approximately USD 6.83 per gram. Some provinces reported that prices per gram could reach as high as USD 10. Moreover, some Canadian consumers were still purchasing their supply on the black market to obtain high quality and potent products.

James Walsh, a consultant at Maple Ridge, noted that consumers were paying nearly triple the average price for products on the black market compared to legal vendors, indicating that consumers were willing to pay more for illegal premium products rather than mediocre legal products. However, the major drawback of the illicit market is that consumers typically do not know where their supply is coming from and what it is treated with during the growing process. As a result, the “craft cannabis” industry emerged in order to meet the demands of consumers seeking higher quality products.

Craft cannabis is an organic and natural growing process that aims to provide consumers with premium products that stand out amongst competitors. Typically, craft cultivators control nearly every aspect of the growing process from the lights to irrigation and airflow. Additionally, craft cultivators generally abstain from using artificial products to avoid harming the plants, which in return maintains the cannabinoid content and provides a higher yield per harvest.

Overall, the intense efforts that craft cultivators rely on, create a premium product that large scale licensed producers are simply unable to compete against. Furthermore, despite the two operating in the same market segment, craft and mass-produced cannabis appeal to two different consumer markets. Large scale cultivators attract consumers looking for more supply at a cheaper rate. On the other hand, craft cultivators target consumers that are demanding high quality and organic cannabis. “We don’t see large-scale cannabis as the future of cannabis,” said Michael Steinmeta, Founder of Flow Canada, a California-based cannabis company. “We see the model as aggregating all of these small farmers to collectively bring massive amounts of craft cannabis to the market.”

Pasha Brands Ltd. (OTC: CRFTF) (CSE: CRFT) is also listed on the Canadian Securities Exchange under the ticker (CSE: CRFT). Yesterday, the Company announced that “its wholly owned subsidiary, BC Craft Supply Co. Ltd (“BC Craft”), has signed a supply agreement with Canada’s first licensed micro processor, North 40 Cannabis (“North 40”).

Founded by Gord Nichol in Nipawin, Saskatchewan, North 40 Cannabis received its micro-cultivation and micro-processing licences from Health Canada on July 26, 2019. Under the agreement with Pasha, North 40 will supply BC Craft with North 40’s annual production, to be sold as dried flower and other cannabis products in Canada.

“I’m absolutely thrilled to have signed an agreement with a company like Pasha,” said Gord Nichol, founder of North 40 Cannabis. “They have shown micro cultivators like me that they are dedicated to ensuring craft producers in Canada will flourish under legalization. I’m excited to move ahead and looking forward to our first harvest this year.” North 40 Cannabis will plant its first legal crop in August 2019 and harvest later in the fall.

With Canada’s current licensed cannabis producers only able to supply an estimated 15 per cent of what Canadians are consuming, Pasha is optimistic that, in addition to its previously established supply agreement with Hearst Organic, this new supply agreement with a licensed micro cultivator and micro processor will help correct the cannabis supply imbalance and bring exciting new products to market. Each micro cultivator in Canada will be able to produce approximately 500 kilograms of cannabis per year, while each micro processor can process up to 600 kilograms of cannabis per year. Canada has tens of thousands of craft producers operating in the illicit cannabis market and Pasha’s wholly-owned subsidiary BC Craft Supply Co. is focused on helping as many small farmers transition into the regulated market as possible.

“Signing this agreement with Canada’s first micro processor is very significant as it affirms BC Craft’s business model with not only the micro-cultivation market but also now with processors,” said Jason Longden, CEO of Pasha Brands in reaction to the news. “North 40 has established a state-of-the-art cultivation and processing facility and we are proud to work with such an innovative team. This is simply the next step in fulfilling our goal of becoming the biggest producer of craft cannabis products in Canada and I’m confident North 40 will help us bring Canadians more of the cannabis that they’re looking for.”

About Pasha Brands: Based in Vancouver, British Columbia, Pasha is a vertically integrated, prohibition-era brand house firmly rooted in BC’s craft cannabis industry, which boasts an international reputation. With proven capabilities in cannabis cultivation, genetic research and development, product processing, and retail, Pasha is uniquely positioned in the new legal cannabis market through its network of hundreds of craft cannabis suppliers under the Pasha umbrella.

Pasha and BC Craft are also developing a craft cannabis campus, which is dedicated to bringing craft quality into the newly legal cannabis market in Canada. BC Craft is driven to assist craft growers in obtaining security clearance and licensing to grow as micro-cultivators, specializing in education and compliance to bring growers into the regulated cannabis supply market.